In New York overnight, the United Nations General Assembly adopted a Palestinian-drafted resolution demanding Israel end "its unlawful presence in the Occupied Palestinian Territory" within 12 months.
The resolution received 124 votes in favour, while 43 countries - including Australia - abstained and Israel, the United States and 12 others voted no.
New Zealand was among the 124 voting in the affirmative.
Asked if Australia abstained to appease Israel, Foreign Affairs Minister Penny Wong told ABC radio the government looked very carefully at the resolution.
Australia wanted to vote for a resolution that reflected closely the July opinion of the International Court of Justice, which said Israel's occupation of Palestinian territories and settlements was illegal and should be withdrawn, she said.
"We worked very hard in New York, with others including the Palestinian delegation, to seek amendments that would enable us to support it as we did the recognition vote and the ceasefire vote, where the text enabled Australia to support it," Senator Wong said on Thursday.
"We were disappointed that the amendments that we and many others sought were not accepted.
"For that reason we abstained."
The world court opinion said Israel's withdrawal should be done "as rapidly as possible", while the General Assembly resolution imposes a 12-month deadline.
The General Assembly resolution also called on states to "take steps towards ceasing the importation of any products originating in the Israeli settlements, as well as the provision or transfer of arms, munitions and related equipment to Israel ... where there are reasonable grounds to suspect that they may be used in the Occupied Palestinian Territory".
Senator Wong said Australia did not supply weapons to Israel.
"We have imposed sanctions of a range of extremist settlers and we will deny any extremist settlers a visa to Australia," she said.
"So there are things in the resolution we have already done.
"We wish we were in a position to have been able to support it, but like the United Kingdom and Canada and Germany, we were not able to support and therefore we have abstained."
